JAKARTA, June 20 (Xinhua) -- Indonesia's central bank on Thursday held its benchmark interest rate unchanged a day after the U.S. Federal Reserve took a neutral stance on its rate policy, despite the pressure to apply for an easing policy.
Governor of Bank Indonesia Perry Warjiyo hinted the next rate cut and decided to edge off the reserve requirement for banks, a move aimed at helping to accelerate economic growth.
The rate-setting board meeting on Thursday kept a seven-day reserve repo rate at 6 percent for the seventh straight month, he said.
"Bank Indonesia will keep monitoring the global economic condition with consideration of cutting interest rate amid tame inflation and pressure to spur economic growth," Warjijyo said at the lender headquarters.
The central bank did not join with India and Malaysia to apply to ease policy to offset downside risks of flagging global economic growth.
Ratcheting off interest rate before the U.S. Federal Reserve cuts interest rates would narrow spread of yield between Indonesia's bonds and the U.S. Treasury bill, making it less attractive for foreign investors.
The U.S. Federal Reserve on Wednesday left the interest rate unchanged at 2.25 to 2.5 percent, amid signals of the health of the U.S. economy and the impacts of trade tensions, but there are signs that the risks of the flagging global economic growth and domestic risks with interest rate cut begin as early as July.
Therefore, Warjiyo said that the lender would drift off the reserve requirement for the banks by 50 basis points from next month to edge up liquidity in a bid to encourage banks to boost credits for helping financing business expansion.
Indonesia's economic growth missed market expectation in the first quarter for weakening investment, lower demand for export and relatively steady consumption, according to the government data.
Rupiah appreciated 0.245 percent against the greenback after the announcement, according to the lender website, and the main index at the Indonesian bourse strengthened before falling 0.3 percent.
The Indonesian government expects to register 5.3 percent economic growth this year and 5.2 percent next year after registering 5.17 percent last year.
